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Indian automakers seek 10% tax cut to boost demand hit by COVID-19

Automakers in India want a temporary cut in taxes on cars, trucks, and motorcycles, as well as incentives to redeem old vehicles, in an attempt to boost sales and generate revenue after the outbreak of the coronavirus has halted the economy.

Passenger car sales in India fell 18 percent in the year to the end of March 2020, the biggest drop in years, after weakening economic growth in the country last year. This was compounded by the national blockade to limit the spread of the new coronavirus.

The Indian Automobile Manufacturers Association (SIAM), an industry body whose members include national companies such as Maruti Suzuki and Tata Motors and local units of global automakers such as Volkswagen AG and Toyota Motor Corp, said on Friday that they had requested assistance from the government.

SIAM said in a press release that companies want a temporary 10 percent reduction in sales taxes on all cars, auto parts, and incentives, in the form of tax refunds, for car owners to dispose of their old cars.

He did not specify how long the timer means.

The auto industry is the backbone of the Indian manufacturing sector in terms of the employment it generates and its economic contribution.

SIAM chief Rajan Wadhera said the outbreak of the coronavirus had left him in "severe distress", making financial support and reviving demand a necessity.

Like other industries, auto manufacturing has halted and car showrooms closed since the end of March when Prime Minister Narendra Modi announced a 21-day closure to contain the spread of the virus. The siege was extended until at least May 3.

The ICRA said in a note that coronavirus is expected to delay the recovery of passenger car sales, adding that it expects sales to dealers to drop 10-12 percent in the current fiscal year. That ends in March 2021, after an 18 percent drop. last year.

Earlier on Friday, the Central Bank of India announced measures to discourage banks from standing inactive funds and stimulating lending to revive the crisis economy.

Picture Source: Reuters, Financial Express

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